made, and it was necessary to prepare entirely new plans. The provisions of the law were explicit, and the department of course undertook to carry them out to the letter. It was found wholly impossible in the present state of the art to undertake a submarine of 25 knots, using oil engines for surface propulsion. The largest oil engine installation on our submarines contemplated up to this time was that on the Schley, and it was soon found that the submarines in the act of March 3, 1915, in order to make 25 knots, would require about two and one-half times the horsepower of the Schley. It was necessary then to prepare an entirely new design for a vessel materially larger than the Schley, about two and one-half times the horsepower, propelled by steam in surface condition. You will readily understand that this involved careful and lengthy investigation of various novel problems. The designs were finally completed, and on December 11, 1915, the department called for bids, to be opened on February 16, 1916-the usual 60 days being allowed for the preparation of bids. When the bids were opened on February 16 it was found that there were no bids for a 25-knot submarine. The Lake Torpedo Boat Co. submitted bids of $1,748,000 and $1,689,000 for vessels to make 20 knots in each case, but requiring acceptance provided they showed 18 knots or more. These bids, which were for one vessel in each case, being beyond the limit of cost of $1,500,000, could not be considered. The Electric Boat Co. bid for two vessels at $1,491,000 upon design 63-B, or $1,494,000 upon their design 63-C, the bid of $1,494,000 being regarded as preferable in view of the superior battery. The bid offered to guarantee a speed of 20 knots— the minimum mentioned in the appropriation act-but required acceptance of the vessels (with a penalty at the rate of $20,000 per knot) provided a speed of 19 knots was reached upon the usual four-hour full-speed trial. The times of construction named were 31 and 33 months. The vessels bid for were substantially duplicates of the Schley, already under contract with the bidder. In view of this fact and of the fact that the company, although it has made little progress in actual construction to date, owing to the fact that it has entirely recast the design, maintains its ability to complete the Schley within the contract time, or by March 19, 1918, the department regarded the times of 31 and 33 months for these duplicates of a vessel already under contract as wholly inadmissible. This question was taken up on February 25 with an authorized representative of the Electric Boat Co., who was asked to state what could be done to shorten the time of construction. He stated that so far he had been unable to obtain promises of delivery of the steel required in the construction of the hulls in less than a year, but that by suitable alterations in the specifications, contract, and administrative rulings of the department, it would be possible to reduce the time bid by about three months. He was informed that this was unsatisfactory, and he undertook to negotiate further with the steel manufacturers. On February 29 the detartment received information as to the result of these negotiations in a telegram which, with its confirming letter, are appended, marked inclosure A. The letter No. 175 referred to in the telegram is also appended, marked inclosure B. At the interview with the representative of the Electric Boat Co., his attention had been called to the fact that the act prescribed a speed of not less than 20 knots, and that the department did not consider his bid requiring acceptance of the vessel provided she showed a speed of 19 knots or over, acceptable under the law. In order to place the contract for these vessels, the department, though somewhat unwillingly, was prepared to accept a majority of the changes suggested by the bidder. One change, however, proposed that the usual provisions in the tenth clause of the contract regarding delays should be replaced by a provision under which any delay in obtaining material should virtually automatically extend the contract. The customary provision as regards delay caused by nondelivery of materials in contracts is a very liberal one. It provides that for such delays in obtaining material, the Secretary of the Navy "may in his discretion grant such extension of time in the fulfillment of the contract as he may deem proper under the circumstances. This the bidder proposed to strike out. The other objectionable change required that the maximum speed should be demonstrated, not by a four-hour trial, as customary for all naval vessels for many years, but by three consecutive runs over a mile course. At 20 knots the actual time of three runs on the course would be only 9 minutes, and allowing for time between runs the time occupied from the beginning of the first to the end of the last would probably not exceed 20 minutes. The department regarded the proposed change as regards delay due to the material as nullifying any definite contract period, and felt that in view of the plain intent of Congress and the practice of many years as regards the method of determining speed the method proposed by the bidder was distinctly contrary to the spirit and intent of the law, although perhaps it might be technically justified. Accordingly, the department sent the bidder the following telegram: ELECTRIC BOAT Co., Groton, Conn.: MARCH 1, 1916. Your proposed reduction of time is nullified by conditions in your letter under which contract time would have no binding effect. Department can not accept any changes in tenth clause of contract. The full speed for four hours' trial must be not less than 20 knots. Other minor matters unsatisfactory but susceptible of adjustment. Award of contract depends upon these conditions. Wire answer within 24 hours. To this the bidder replied as follows: SECRETARY OF the Navy, JOSEPHUS DANIELS. New London, Conn., March 2, 1916. Navy Department, Washington, D. C.: While the tenth clause of the contract as suggested by us is accepted by other Governments and is in our judgment a fair and reasonable arrangement under the peculiar conditions of this case, we are prepared in deference to the department's wishes to waive this provision. As shown by our bid we are prepared to guarantee 20 knots on the four-hour full-power trial with a penalty provision for deficiency in speed, and we have no objection to restoring this matter to the original status of our bid. We can not, however, guarantee 20 knots on this trial with a provision for rejection in the event of failure to attain this speed. The standardization trial suggested by us was the only method we could see of meeting the provision of the law which requires a maximum speed of 20 knots but which does not specify the duration of the demonstration trial nor the governing conditions of the same. In handling this matter we have been guided not by our own personal interests, but by the department's view of the public interests, and having now offered the very earliest possible delivery under conditions the acceptance of which is within the department's discretion we have now done everything possible to meet your wishes. ELECTRIC BOAT Co. It will be seen, then, that the only bidder for the construction of these submarines is prepared to reduce the time for construction from 31 and 33 months to 24 and 26 months, but refuses to guarantee a speed of 20 knots with a proviso for rejection in case of failure to attain that speed, his bid providing for acceptance at a speed as low as 19 knots. It has been the practice of the department for many years to require the "contract speed" in every vessel to be demonstrated by a run of four hours at full speed, the speed thus obtained being the official maximum speed. Moreover, whenever the authorizing act as regards a naval vessel has required that the speed shall be "not less than" a certain amount, the contract has provided that if the vessel does not show this speed of the act on trial, it shall be rejected. In the act of March 3, 1915, authorizing the submarines in question, there was authorization for "six torpedo boat destroyers, to have a speed of not less than 30 knots per hour." The contracts which have been made for these vessels provide "if the vessel fails to develop and maintain a speed of at least 30 knots an hour on the four-hour high-speed trial, she shall be rejected." The department, in view of all the circumstances, feels that it can not place a contract for these vessels at the only bid received within the limit of cost, as modified above, without violating the obvious intent and purpose of the provisions of the law with reference to speed. The only alternative is to construct the vessels in navy yards upon the steam-driven designs. The department, however, as at present advised, does not favor steam-driven submarines, and feels that it was not realized at the time of the passage of the act that the provisions for speed would necessitate construction containing this undesirable feature. This being the case, it is considered necessary to explain the whole situation as above to the Congress in order that it may indicate its wishes in the premises. Sincerely, yours, Hon. LEMUEL P. PADGETT, M. C., JOSEPHUS DANIELS. Chairman Committee on Naval Affairs, House of Representatives. for the payment of bonuses over the prevailing high market prices for the purpose of hastening delivery. We expect to have final information on this subject to-morrow afternoon or Wednesday morning, when we will, in accordance with our promise, take pleasure in telegraphing the department, stating what further, if any, reduction in time can be made. Very respectfully, SECRETARY OF the Navy, Navy Department, Washington, D. C. ELECTRIC BOAT Co. Vice President. |